Property Tax


Bruce ZumBahlenThanks to Bruce ZumBahlen for submitting the following guest post to the VFVC blog.

Dear VF/VC readers,

During the 2007 MN legislative session, the Governor vetoed an Omnibus Tax Bill that included a property tax break for woodland owners who have a forest management plan, The veto was for reasons unrelated to the woodland tax provisions. So close was the forestry community to having a law that would help in achieving the goal of having another 1 million acres under forest management plans.

But, you can’t keep good legislation down. That 2007 Omnibus Tax Bill was resurrected during the 2008 legislative session. It passed this time minus the provisions that the Governor opposed. The Governor signed it in early March. For the first time, MN has a law that provides the opportunity for woodland owners who are managing their property under a forest stewardship plan to receive a reduction in their property taxes payable in 2009 and thereafter.

As reported earlier by Matt Rezac on this blog site, the new law allows forest owners to apply to their county assessor to have their lands assessed at 0.65% rather than 1%. The management plan must meet the Sustainable Forest Incentive Act (SFIA) standards but the land can not enrolled under the SFIA (to avoid the perception of double dipping). The Tax Bill also changed the SFIA law. With the strong support of Senate Tax Committee Chair Tom Bakk, the SFIA minimum annual payment was raised from $1.50 per acre to $7.00 per acre.

Building on what had already been enacted, another bill sponsored by Representative Hosch was introduced this session to aid in administering the new property tax break. An attempt to lower the class rate to 0.55% failed, but the other provisions to improve what is now titled in statutes as “2c managed forest lands“ made it into another Omnibus Tax Bill. It was a nail biter, but the Tax Bill passed in the closing hours of the legislature.

This second Tax Bill raised the minimum acreage eligible for the tax break to 20 acres from 10 acres enacted earlier keeping the maximum acreage to not more than 1,920 acres. It eliminated the annual application requirement that will save time for county assessors and the landowners alike. Another provision allows split classifications of parcels with a structure so that woodlands could be separated from being subject to a higher assessed classification. The Bill also exempted the 2c managed forest lands from being classified as to their highest and best use.

The MN Department of Revenue will be preparing guidance to county assessors on how to implement the new law in the new future. So, give it a little time before approaching your county assessor to take advantage of the new law.

The following organizations partnered with the MN Forestry Association in support of the legislation: the Audubon Society, Avon Hills Initiative, MN Center for Environmental Advocacy, MN Deer Hunters Association, MN Forest Industries, MN Seasonal Recreation Property Owners Coalition, MN State Tree Farm Committee, MN SWCD Forestry Association, Ruffed Grouse Society, and the Nature Conservancy. Thanks to all for your support in encouraging retention and sustainable management of family forest lands.

Bruce ZumBahlen
MN Forestry Association

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Thanks to the DNR’s Meg Hanisch and Keith Jacobson for sharing the Division of Forestry’s summary of major 2008 legislative outcomes affecting our state’s forests.

Vital Forest/Vital Communities partners and programs had a positive impact on a number of the funding and policy decisions, including the appropriation for Forest Legacy conservation easements, the allocation to the Minnesota Forest Resources Council for a study of policy tools for preventing forest fragmentation and parcelization (co-funded by Blandin Foundation), the Minnesota Forests for the Future program and adjustments in the way sustainably managed woodlands are taxed.

Changing the way our woodlands are accessed and taxed was one of the key recommendations identified by participants in the 2006 and 2007 Family Forest Stewardship conferences as part of a strategy to achieve the goal, embraced by over 20 organizations, to increase the number of acres of family forestland with Forest Stewardship Management Plans from 1.3 million to 2.3 million by 2015.

Congratulations are particularly in order to Bruce ZumBahlen, his colleagues at the Minnesota Forestry Association, Jeff Forester and the Minnesota Seasonal Recreational Property Owners Association and Tom Kroll for their hard work on helping achieve these improvements to the Omnibus Tax Bill. Your vision, collaboration, and tenacity made it happen!

Dear VF/VC readers:

I’m happy to report some good progress at the State Capitol related to recommendations that emerged from last September’s Family Forest Conference in pursuit of our “Next Million Acre” goal. A unique coalition has formed to speak with one voice on a variety of policy proposals related to forest lands, including the MN Forestry Association, the MN Deer Hunters Association, MN Forest Industries and the MN Seasonal and Recreational Property Owners Coalition among others. Their good efforts are paying off!

Property TaxesA tax bill has been passed and signed that will give many forest owners with stewardship plans the chance to receive a marked reduction in their property taxes. To qualify, forest owners must have at least 10 acres and no more than 1920 acres. The law allows these forest owners to apply to their County Assessor to have their land assessed at 0.65% rather than 1%. They must not be enrolled in the Sustainable Forest Incentive Act, but have a forest management plan that meets SFIA standards. There is also good news for those who ARE enrolled in the SFIA, as the minimum annual payment has been raised to $7.00 per acre, an increase from the previous floor of $1.50 per acre. These are positive steps forward and evidence that the momentum built during last session was indeed a harbinger of change to come.

But wait, there’s more! Bills have been introduced in the House and Senate to make additional improvements on the forest property tax laws. They seek to remove the requirement for landowners to apply annually, to lower the class rate a step further to 0.55 %, as well as a variety of other things. If you would like more information about legislative developments, please contact Bruce ZumBahlen of the MN Forestry Association at zoomerbruce@aol.com.

Congratulations to everyone concerned about these issues, and thanks to those of you who have advocated change. You can be sure that we’ll update you again as we receive word of further developments from the Capitol.

In the meantime, may you embrace the muddy spring in Minnesota’s woods.

Q: What public policy issue does research suggest could have the greatest impact on the threat of parcelization of forest land?

We’ll get to the answer to this question in a moment. First let me tell you that it’s been a very busy few weeks for Vital Forests/Vital Communities, and like the leaves outside my window, the dust is still settling.

I’ll save for another day stories about other September events including the Forestry and the BioEconomy Conference, Goods from the Woods, and the Governor’s announcement of the signing of the second Minnesota Forest Legacy Partnership conservation easement on 51,000 acres – nearly 80 square miles – of Itasca and Koochiching County lands. Whew! Instead I will focus these few lines on some reflections about the September 12-13 Family Forest Stewardship Conference – Sustaining Our Commitment, Advancing the Agenda.

Over 100 folks joined us at Saint John’s to check in on the status of our collective efforts to advance the goal we agreed to in 2006 of increasing by one million the number of acres of family forest land under sustainable management. We have agreed to use stewardship plans as a measurable indicator to which we can hold ourselves accountable.

Participants spent the morning hearing about work accomplished over the past year, and the afternoon strategizing on where to focus our efforts going forward. Presentations and other details about the conference are on the conference home page, including some nifty images of Tom Kroll’s Oak Management Tour.

Conference proceedings , ably drafted by Dovetail Partners, Inc.’s Katie Fernholz, summarize the Action Agenda proposed by participants. These plans are more than aspirational “nice-to-do” ideas. Rather, the key players in getting this work done – Minnesota’s Department of Natural Resources, the Minnesota Forestry Association, University of Minnesota Extension, and others – have reviewed these specific steps and explicitly signed on to walk their talk. Check out the proceedings to see how you can plug in. Together, we can continue to make real progress toward this important goal.

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Click on the image to participate in our Getting to the Next Million Acres Poll

Okay – now for the answer to the public policy question I posed at the beginning of my post.

Research suggests that health care could have the greatest impact on the threat of parcelization of forest land. This surprising finding came out during the keynote given by Catherine Mater of the Pinchot Institute. Catherine spoke about her not-yet-published research results on what offspring of current private forestland owners think about maintaining their family forestlands.

Catherine MaterCatherine’s research shows strong concerns among the next generation of landowners about the rising costs of health care and their ability to handle unexpected medical expenses. In fact, dealing with catastrophic health costs is cited most often by family forest land owners as the number one reason that prompts them to sell their forest land. Many times these sales result in parcelization, which in turn fuels forest fragmentation. (A study of these trends in Itasca County was recently released by the University of Minnesota’s Mike Kilgore et al. Click here to access the study)

Tree SnakeAs the U.S. Forest Service’s Brett Butler, another keynote presenter, observed in his commentary on Catherine’s presentation, it is reasonable to consider that the single most important public policy opportunity to address the threat of parcelization may be universal health care!

That gives all of us something to think about as the next Presidential election cycle heats up.

Q: What do the Ruffed Grouse Society, The Conservation Fund, Minnesota Forestry Association, Forest Capital Partners, and 26 other organizations have in common?

A: All have signed-on as sponsors of the upcoming Family Forest Stewardship Conference: Sustaining Our Commitment, Advancing the Agenda. If you’re planning to attend the conference and haven’t registered yet, please take a moment and do so now by visiting the conference web page.

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I’ve often heard it said that while most family forest land owners don’t identify timber management as a top priority for owning their land, most do end up harvesting timber for one reason or another. Sometimes the reason is financial, and sometimes it’s because the forest just starts to fall apart and obviously needs help. Like a garden, forests need tending to be productive and stay healthy, especially absent natural fire regimes. After lots of thought and planning, my brothers and I have contracted for a harvest next week of about 300 cords of over-mature aspen off our 40 acres in Lake Ponto Township in southern Cass County. With the help of our private consulting forester, we’ve used the DNR’s Field Guide to the Native Plan Communities of Minnesota to identify the land’s native plant community used that information to plan our harvest and regeneration strategy. And so, despite the “timber shock” we’re likely to experience when we see the woods again in the immediate aftermath of the cut (see MyMinnesotaWoods.org for a good discussion and images of what you can expect post-harvest), I can feel confident I’m being a good steward of our woods.

Helping more of Minnesota’s family forest land owners be good stewards is the goal of the Family Forest Stewardship conference Blandin Foundation is sponsoring September 12-13 at Saint John’s University. More than thirty other organizations have joined us to embrace Vital Forests/Vital Communities’ ambitious goal to increase by one million the number of acres of family forestland in Minnesota under sustainable management by 2015. The work accomplished towards this goal in the past year is summarized in this Pre-Conference Backgrounder.

As we come down the home stretch to the conference, our hearty planning committee, including Dovetail Partners’s Katie Fernholz, U of M Extension Educator Eli Sagor, DNR’s Gary Michael, and MFA’s Bruce ZumBahlen, are nailing down the final details of what promises to be a lively meeting.

Besides foot tapping to the old time music of the Eelpout Stringers and touring Saint John’s Arboretum with one of my favorite Minnesota foresters, Tom Kroll, we’ll hear Pinchot Institute’s Catherine Mater and USFS Analyst Brett Butler discuss their ongoing research and new findings about what how most effectively to connect with family forest land owners. Most importantly, we’ll discuss – with your input – how to advance our agenda to improve stewardship on the 40 percent of Minnesota forest lands owned by families like yours and mine.

We hope you’ll join us!

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This summer I am working with others to plan a fall conference to check in on progress towards an ambitious goal to increase by one million the number of acres of family forest land under stewardship by 2015. This goal, along with a four-part action plan, was first articulated and adopted in May of last year at the “Next Million Acres” conference held at Saint John’s University.

On September 12-13, we will reconvene at Saint John’s for Family Forest Stewardship: Sustaining our Commitment, Advancing the Agenda to share news and updates on progress, and strategize for the months ahead. I hope you’ll join us.

We heard at the 2006 conference that success in improving stewardship on more family forest land will require a comprehensive approach that addresses three key challenges:

  • Engaging family forest landowners
  • Protecting the forest land base from development and parcelization and
  • Assuring stewardship with competent and meaningful advice and assistance.

Conference participants identified opportunities to modify Minnesota’s property tax classification system as a possible tool for achieving progress on all three issues. A February 2006 report by the MN Department of Revenue, Assessment and Classifications Practices Report – Rural Woodlands, provided an opening by recommending the creation of a new property tax classification called “Rural Vacant Lands” (to include 2b timber land), along with a lower rate for this new class than for developed lands.

Since last May’s meeting, Saint John’s Arboretum Director Tom Kroll and long-time MFA leader Bruce ZumBahlen have taken a leadership role in coordinating efforts to improve the Department of Revenue’s recommendations from a forest stewardship perspective, and to promote their adoption by the 2007 legislature.

These efforts bore some fruit, though as is often the case with legislative politics, it’s been two steps forward, one step back.

Thanks to leadership by Senators Bakk and Saxhaug, with support and encouragement from MFA members and others, the final 2007 Omnibus Tax bill (HF 2268) forwarded to the Governor did indeed include provisions to create a new property tax classification for certain unplatted rural lands, including undeveloped forests. Under the proposed changes, the subjective requirement that undeveloped lands be taxed at their “highest and best use” was removed.

Furthermore, properties under this classification would have been taxed at a reduced net class rate from 1.0 to .65 percent if they:

  • Consisted of no less than 10 and no more than 1920 acres. 10 acres aligns the 2b classification with the 2a classification for agricultural lands, easing the demands of implementation on county assessors. 1920 acres aligns with the cap stipulated by SFIA.
  • Were managed under a state-approved Forest Stewardship Program;
  • Were not enrolled in the SFIA (to prevent “double dipping”).

Unfortunately, this language was lost when the Omnibus Tax Bill was vetoed by Governor Pawlenty on May 30, 2007. The passage of this language in both the House and Senate portends well for the proposal’s future, and looking to the 2008 session, supporters will have an opportunity to build on this agreement as well as to push for additional improvements. Tom Kroll and others have targeted a number of changes that more effectively serve as an incentive for good stewardship and against forest land parcelization. These include:

  • Reduce the new classification rate to .55 percent. This provides a greater incentive to landowners to develop a Forest Stewardship plan. It also aligns the 2b class rate with the 2a rate for agricultural lands.
  • Raise the bar of eligibility to 20 contiguous acres. This matches other family forest standards, such as the Forest Stewardship Program and SFIA, assures that the most valuable acres for conservation are targeted, and reduces the amount of tax shift.
  • Account for the needs of county assessors regarding split-classifications (breaking up of a tax parcel) done to break off a cabin.

Click here for a fuller analysis of the Department of Revenue’s report and recommended modifications, from a forest stewardship perspective.

We are working with the indefatigable Tom Kroll to develop opportunities to build and demonstrate to legislators broad support for these proposed changes.

If passed in 2008, supporters should prepare for a welcome challenge: the need to ensure that Minnesota’s professional forestry community has adequate capacity to meet the anticipated wave of new requests for family forest land assistance.

We’ll hear more about these issues at the September 12-13 Family Forest Stewardship Conference. I invite you to register for the conference today.